Finance

What to Watch Out for With Merchant Cash Advances

When operating a business, there may be certain times when fluctuations in cash flow become particularly challenging. You might find yourself considering a Merchant Cash Advance (MCA), among other financing options, to help. Before you apply for an MCA, though, it’s wise to make sure you understand exactly how MCAs work and the impact they can have on the financial health of your business.

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What is a Cash Flow Budget (and Why Do You Need One)?

Your company may turn a profit today, but will it be profitable six months from today? It is crucial to carefully track how much money your company is taking in and how much it needs for the future. Maintaining a cash flow budget will help you forecast your company’s overall financial health.

Many companies are profitable on paper, yet still get into trouble because they do not have the cash on hand to fund their operations. The owners of these companies may be familiar with their income statement, but they do not know their cash balance.

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How to do Customer Collections the Right Way

Developing a timely approach to billing and collecting payments from customers is critical to maintaining your company's financial strength. Here are some helpful tips that can shorten your collection cycle and improve your company’s cash flow:

Know Your Customers

Working with people you trust is the most important aspect of collections. When taking on a new customer, you should check that company’s credit rating and payment history. You should also ask for credit references.

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Flexible but Firm: Credit Policies That Work for You and the Customer

A common mistake many business owners make is counting receivables as cash. It is important to remember that the invoice is worthless until the customer pays it. You need that payment as soon as possible for your company to meet its goals.

That is why it is crucial to have a credit policy in place that you and your customers can follow. The terms and conditions you establish for providing services on credit will drive how quickly and consistently you can turn your invoices into revenue. Here are a few things to consider when drafting your credit policy:

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Basic Accounting For Trucking Companies

No matter your fleet size or how long you have been in business, it is crucial to understand basic accounting terms and financial documents. Like baseball standings on the sports page, accounting explains your company’s history, health and overall performance. Without understanding this information, you will not know if you are succeeding or failing. That limits your ability to make good decisions, operate effectively, and position your company for future growth.

Common Terms

To get started, here are a few basic accounting terms and definitions:

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Factoring vs. Merchant Cash Advance

Using factoring services or getting a merchant cash advance both put money in your bank account quickly, but there are several things to consider when deciding which is the best option for you.

What is Factoring?

Factoring is a financial service where a factoring company purchases your open invoices. You usually receive payment for those invoices within 24 hours. You can choose which invoices to sell to the factor and you’ll receive an advance on each of them. Some factoring companies advance up to 97% of the total amount of the invoice.

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How to Export Your Products to the United States

Selling your goods to customers in the United States can represent a huge growth opportunity for your business. After all, the U.S. economy remains the largest of all countries, representing 25% of the gross world product. Last year, the U.S. was the world’s second largest importer after the European Union, importing a total of $2.7 trillion in goods and services.

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What is Purchase Order Financing?

Purchase order financing is a form of short-term funding that provides the cash companies need to pay their suppliers up-front for a customer order.

Also sometimes called “P.O. financing,” the advance funding of purchase orders is an effective tool for business owners who don’t want to turn down a customer request because they lack the cash to fulfill it. Purchase order financing enables companies to handle big orders, enhance customer and supplier relationships, and improve their order volume.

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